Nigeria reinsurer eyes bigger deals with Nairobi office
Posted Wednesday, July 4 2012 at 19:28
Nigerian company, Continental Reinsurance, has opened a regional office in Nairobi in a drive to grow its presence in Africa.
The Sh500 million investment is expected to intensify competition for Kenya’s four reinsurers and give underwriters more alternatives in the market.
The Lagos stock exchange-listed firm has incorporated a Nairobi-based office to oversee East and Central Africa and is backing it up with a Sh800 million increase in capital base.
Continental Re opened a Nairobi branch in 2009 but says the growing demand for reinsurance business has informed the upgrade to a fully-fledged regional office.
“The Kenya market is very important and has shown very good prospects. We have seen growth so far and decided instead of being a branch we capitalise and form a core company in Nairobi as we expect the market will continue to grow,” said Femi Oyetunji, Continental Re managing director in an interview with the Business Daily in Nairobi.
Mr Oyetunji said since opening the branch, the reinsurer has recorded extreme growth with retail premiums reaching $10 million (Sh840 million) and property insurance income being the largest. This year the company expects to grow by 40 per cent.
Issac Ng’aru, an insurance consultant with Ng’aru & Associates, said the entry of a new player in the market is timely as there are a lot of business opportunities in the region.
He said the insurer has managed to get business locally since its entry in the Kenyan market and is expected to thrive with innovative products.
“There is capacity for more reinsurance companies. Increased competition in the local insurance market has meant low retention (margin) thus the need for more firms to help with the risk,” he said.
Continental Re is expected to increase competition in the local industry which has five majors based in Kenya—Kenya Reinsurance, African Reinsurance, East Africa Reinsurance, ZEP-Re (PTA Reinsurance) and the recent entrant Ghana Reinsurance—in addition to others that do reinsurance without a physical office.
Kenya-Re which recently rebranded is the dominant player in the market and is also expanding across Africa.
“The demands of the market place in terms of products and services are changing by the day... providers have to be innovative to meet the evolving and increasingly more sophisticated insurance customer needs,” says Jadiah Mwarani, Kenya Re’s managing director.
Continental Re is looking to broaden products in the energy sector, an area it has vast experience in . East Africa has witnessed heavy investment in the energy sector – from oil exploration to investment in geothermal.
“The risk is high in this area (energy) because of the investment. It’s an area of considerable scope for reinsurance,” said Mr Ng’aru.
The rise of Kenya’s risk profile in the past 12 months has seen terrorism and political risk premiums rise by up to 100 per cent.